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Zenith set to put unit on Wendy's

Cordiant's Zenith Media is close to forming a dedicated buying unit to serve Wendy's International, the second such group created to deal with client problems in less than three months.

If the fast-food chain's $120 million account gets its own unit, the arrangement would seem to call into question Zenith's practice of pooling clients' money to exercise buying clout.

A SERIES OF BLOWS

The specter of a Wendy's unit is the latest in a series of blows to Zenith, which called in Price Waterhouse & Co. to evaluate its operations. In its 16-month tenure in the U.S., Zenith has been hammered by a series of senior management changes and aud-ience underdelivery problems in local TV buying for two major clients.

In May, Miller Brewing Co. demanded, and received, a dedicated local media unit at Zenith.

Both Miller and Wendy's had underdelivery problems on local TV buys, Zenith insiders said, a situation they hope to avoid in the future with the separate units.

"We're looking at a number of possibilities for Wendy's. No decision has been made," said Bill Whitehead, CEO of Bates North America.

Zenith was formed in the U.S. by merging the media buying arms of Cordiant's Bates USA and Saatchi & Saatchi Advertising. It buys about $40 million in spot TV for Wendy's in 38 markets, and another $80 million or so nationally.

The Wendy's situation is further complicated by the impending departure of Ari Antonelli, Zenith's senior VP-group supervisor on the network TV portion of Wendy's. She resigned last week.

Neither Ms. Antonelli nor Wendy's returned phone calls by press time.

Her leaving caps a host of high-level departures at Zenith. Among them: Jerry Bonsaing, Bates' 16-year spot TV veteran, who left in April after the Miller situation; and senior executives Ed Cicale, Don Morrison, Charles Rutman and Pat Spilker. All except Mr. Morrison were originally at Bates.

Mr. Bonsaing was succeeded as director of local broadcast by Bonita LaFlore, another spot TV veteran who was at the Media Edge and then BJK&E Media, both New York. Mr. Bonsaing could not be reached for comment.

"It's been very difficult from day one," said a former Zenith employee of the shop's U.S. operation. "Saatchi and Bates have entirely different cultures. Just look at the number of people in senior positions who have already left."

Countered a Zenith insider: "We've taken two media shops with long traditions and very different ways of doing things and put them together. It would be extremely naive to think it would run smoothly from day one."

The underdelivery problems for Miller and Wendy's are blamed by some Zenith employees on management and manpower issues.

Zenith President-CEO William Grimes is criticized by some insiders for having little media experience. Mr. Grimes is best known for heading ESPN in its nascent days. His lieutenant, Exec VP-General Manager Stephen King, who was the managing director of Zenith in the U.K., doesn't have enough of an understanding of media in the U.S., especially spot TV, some current and former employees said.

Mr. Grimes referred calls to Mr. King, who said only that Zenith was "stronger than when we started" and declined to comment on dealings with clients.

The second problem is one of manpower, say some of the critics. Bates had handled spot TV in a centralized manner, out of its New York office. When Zenith was formed, it was decided to do the spot buying regionally.

"But they never staffed up for it properly," said one media executive with knowledge of the situation. About 100 people are employed by Zenith's local broadcast division, "but they really need 135 to 150," this executive said.

By rushing to a regional system, Zenith created an underdelivery problem for both Miller and Wendy's, the media executive said.

According to published reports earlier this year, Zenith received low marks from Miller, resulting in the formation of that dedicated unit. The previous year, Bates scored a B in the annual evaluation, an insider said.

"The Bates people didn't become idiots just by moving to Zenith," this insider said. "Obviously something else was wrong."

There have been other issues as well. Price Waterhouse's coming in to evaluate Zenith's operations is indicative, critics said, of significant problems. Mr. King disagreed with that assessment, and said the consultants were brought in to give second opinions on some projects.

"They were helping to give us management expertise," he said.

The friction within Zenith is also carrying over to the national TV group. Zenith client Toyota Motor Sales USA made $100 million in buys during the recent network TV upfront buying period, executives said, but snubbed CBS. Some at Zenith wanted its other clients to skip CBS during the upfront as well, said executives familiar with the deal.

"The philosophy of clout can make sense," said one media executive, "especially if you're dealing with package-goods clients. But the interests of Toyota, Miller and Wendy's are such that it's hard to make the concept work for Zenith."

Despite its woes, Zenith still has billings of $1.5 billion to $2 billion and many current employees believe passionately that the concept of pooling Bates and Saatchi & Saatchi buying is a better media mousetrap.